When valuing a business, experts often look beyond the company’s financial statements. Management interviews and document requests may provide additional objective insight into how much the owners believe the business is worth. This information shouldn’t be used as a substitute for a comprehensive valuation analysis, but it may identify discrepancies that need to be reconciled. Here are five common alternative indicators of value that experts may consider: Buy-sell agreements. Owners often protect their business interests with buy-sell agreements. These agreements may provide a specific value ..read more

Choosing the right business entity has many implications, including the amount of your tax bill. The most common business structures are sole proprietorships, partnerships, limited liability companies, C corporations and S corporations. In some cases, a business may decide to switch from one entity type to another. Although S corporations can provide substantial tax benefits over C corporations in some circumstances, there are potentially costly tax issues that you should assess before making the decision to convert from a C corporation to an S corporation. Here are four considerations: 1. LIF ..read more

External audits can help assure your not-for-profit’s stakeholders that your financial statements are fairly presented according to U.S. Generally Accepted Accounting Principles. They can also help prevent occupational fraud. Often, audit reports contain recommendations for organizations to act on. And if you fail to make changes that respond to risks or concerns discovered in an audit, it could threaten your nonprofit’s future. Discuss the Report When auditors complete an engagement, they typically present a draft report to their subject’s audit committee, executive director and senior financ ..read more

Occupational fraud is more than just a financial hazard. It can transform a company’s reputation, culture, and relationships. However, before dealing with any of the deeper repercussions from fraud, exposed organizations must “clean up” the damage. This may involve terminating employee culprits, filing civil action, or reporting perpetrators to the police. Whatever a company decides to do in the aftermath of a fraud incidence, prompt action is critical, and internal controls must be addressed. How Do Defrauded Victims React? The Association of Certified Fraud Examiners ..read more

Comprehensive risk management is one of the primary responsibilities of not-for-profit leaders. You probably regularly consider and act to mitigate risk to your facilities and assets and your staffers and clients. What about your volunteers? Even though the federal Volunteer Protection Act of 1997 provides some protection, volunteers face the real risk of being sued for actions while working for your organization. They also can become subject to tax liabilities. State by State The Volunteer Protection Act offers some degree of defense for volunteers acting within the scope of their responsibil ..read more

Many nonprofit organizations struggle to maintain a full and engaged board of directors. If your board meets frequently, has high attendance expectations, and asks members to perform significant “homework,” you may have difficulty recruiting and retaining members. Qualified individuals are generally busy with work, family, and other activities, and may not have enough free time to devote to all of the obligations expected of board members. However, by dividing responsibilities into committees, you can help board members feel less burdened while also keeping them for longer. Comm ..read more

It’s not unusual for a partner to incur expenses related to the partnership’s business. This is especially likely to occur in service partnerships such as an architecture or law firm. For example, partners in service partnerships may incur entertainment expenses in developing new client relationships. They may also incur expenses for: transportation to get to and from client meetings, professional publications, continuing education and home office. What’s the tax treatment of such expenses? Here are the answers. Reimbursable or Not As long as the expenses are the type a partner is expected to ..read more

In this article, we present two more scams from the IRS’ 2024 Dirty Dozen list: spearphishing and schemes aimed at high-income tax filers. Read on so you don’t fall victim to these scams. 9. Spearphishing Spearphishing is phishing that uses scams designed to target a specific business or organization.  As we discussed in IRS Dirty Dozen Part 1 – 2024 Campaign Kicks Off With Warning About Phishing, Smishing, and ERC Scams, phishing occurs when an imposter sends an email that appears to be sent from a legitimate source, but it lures taxpayers into providing sensitive personal informati ..read more

Employees who commit fraud typically strive to keep the schemes running as long as possible by concealing their activity from others. The success of thieves is largely determined by their identities, roles within their organizations, and the type of fraud they commit. To detect fraud in your company and avoid financial losses, get familiar with common perpetrator characteristics and the tactics occupational thieves employ to hide their crimes. Identity and Fraud Every two years, the Association of Certified Fraud Examiners (ACFE) publishes a report containing a detailed evaluati ..read more

Businesses usually want to delay recognition of taxable income into future years and accelerate deductions into the current year. But when is it wise to do the opposite? And why would you want to? One reason might be tax law changes that raise tax rates. The Biden administration has proposed raising the corporate federal income tax rate from its current flat 21% to 28%. Another reason may be because you expect your noncorporate pass-through entity business to pay taxes at higher rates in the future and the pass-through income will be taxed on your personal return. There have also been discussi ..read more